German Chancellor Angela Merkel, right, arrives for an EU summit on Thursday, Oct. 24, 2013. A two-day summit meeting of EU leaders is likely to be diverted from its official agenda, economic recovery and migration, after German Chancellor Angela Merkel complained to U.S. President Barack Obama that U.S. intelligence may have monitored her mobile phone. (AP Photo/Geert Vanden Wijngaert)
BRUSSELS (AP) — German Chancellor Angela Merkel said Thursday the 17-nation eurozone must achieve a stronger coordination of its economic policies to remain competitive and spur growth.
Merkel's comments at the outset of a summit of European leaders in Brussels came as her government seeks to convince its partners to hand the EU Commission, the bloc's executive arm, more powers to oversee member states' economic policies.
The EU's 28 national leaders were also set to discuss the timeline for the next steps in creating the planned banking union, a set of new authorities and rules that aims at stabilizing the financial system.
They still disagree over how to set up and fund a European authority capable of bailing out or winding down bust banks, the so-called single resolution mechanism. The leaders weren't expected to reach an agreement on the issue Thursday, only to reaffirm their commitment to find a solution over the next two months, diplomats said ahead of the meeting.
EU nations have already agreed to set up a joint banking supervisor anchored at the European Central Bank. Before formally taking over that task, the ECB will review the assets of the bloc's biggest banks through 2014 to identify possible weak spots, such as insufficient capital. The ECB insists the resolution authority should be in place by the end of the review to prop up or shut down banks if necessary.
If that can't be achieved, every government, even those with weakened finances, will have to fend for themselves.
"Countries need to take all possible measures regarding the preparation of their national systems, so if serious issues surface from the bank reviews, that they can also be dealt with," said Dutch Prime Minister Mark Rutte on the way into the meeting.
Merkel said the bloc cannot limit itself to integrating its financial system, but also needs a more coherent economic policy to increase competitiveness and innovation.
"I'm convinced that we have to collaborate yet more," Merkel said.
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